Remember to read the section on daily cost analysis before using this simulation tool.

It is an accepted truth that the best-performing supervisors know the daily costs of the work tasks they oversee and use that knowledge to effectively manage the construction of various items of work. While the goal is to keep costs within budget, it is equally valuable to recognize when costs exceed the budget. An overbudget cost may arise from an estimating error, a crewing mistake, or a change condition in the contract that may be compensable to the contractor.

One of the most basic yet most powerful tools in construction is a daily cost analysis. It allows the person running an operation to evaluate daily performance based on budget vs. actuals. The most interesting aspect of this tool is that a person running an operation can easily predict what the day's outcome will be based on the known budget and the planned work. Applying "what-if" analysis to daily cost analysis involves exploring different scenarios and their potential impacts on project costs. This helps identify cost-saving opportunities, mitigate potential risks, and make informed decisions. By adjusting variables like labor hours, crew composition, or daily output, one can see how these changes affect the overall project budget and time. What percentage of young professionals or seasoned professionals who are running construction operations every day do you think know about or use this simple but powerful tool?

This video shows step-by-step instructions on how to simulate and conduct the daily cost analysis.

Remember to read the section on work planning and cost estimating before using this simulation tool.

What is the cost of a poorly planned operation? Successful projects share one key feature: they have well-thought-out plans. These plans involve extensive brainstorming to better understand the scope of work and the factors that influence or could be influenced by it. A young professional is assigned to oversee an item of work involving just a few activities. Does the professional have the construction method figured out? Do they know which contract specifications and drawings to reference for the scope of work? What about the construction materials, the different skilled trades, and the type and size of construction equipment to use, if any? Additionally, does the young professional know the budget for those tasks, the target daily outputs that will make the operation profitable, the associated hazard analysis, the relevant quality control measures, or the construction survey items? How would this differ if a seasoned professional new to the scope of work is in charge? This demonstrates why work planning is essential and must be executed properly. Simulating this process in advance allows for what-if analysis and results in a better outcome.

This video shows step-by-step instructions on how to complete the work planning and cost estimating app.